Raging debate: Repealing the gas tax

Everyone's feeling the pinch at the pump lately. And with summer almost two months away, $4-a-gallon gas will come and go in the blink of an eye.
What to do, what to do?
Politicians of all shapes and sizes have chimed in with their plans to ease the pain in your wallet.
Last week, Long Island's Republican Assembly ...

10 comments

Personally, I think repealing the gas tax would do little, if anything, to save people money. In fact, it would probably just prompt people to drive a little more. Seriously, say you have a 15 gallon tank, at .18 cents a gallon, that is a savings of just about $2.70 per fill-up. Yes, it is a savings, but come on, nothing to really jump up and down about.

What they should do is take the enormous surplus of revenue they are seeing right now and put it into infrastructure – developing more public transportation (rapid transit, light rail, etc) and finding alternative forms of energy. Yeah, like that will ever happen….

You can’t repeal the law of supply and demand. If they get rid of the gas tax, prices will rise to cancel out most, if not all of the savings. The only difference would be that the money would be going into the pockets of the oil companies instead of into government coffers. It’s a bad deal all around.

I agree with the comments. It is a short term fix, which will do more harm than good, to a long term problem. Why is it that rise in the price of gas seems unequal to the price of a barrel of oil? The price per gallon of gas rises more than the price per gallon of oil. This is why there are record profits at the greedy oil companies. It is not because they are selling more gasoline; it is because they bump up the price of gasoline more than the price of oil. Why is it that when the price of oil rises so does the price of gas even though that higher priced oil has not reached the market yet? Why are our (worthless) elected officials not looking into these issues?

Don, couldn’t agree with you more — but you answered your own questions — GREED!! Everything is about money and power. That pretty much answers all the questions about why things AREN’T done — money and power. Very sad.

The high price of gas and other commodities is more a function of monetary inflation and rising demand than “price gouging”.

Frankly, the only way to reduce the price of gas is for the Federal Reserve to stop increasing the money supply and lowering interest rates and for oil exploration, service, production and refining companies to invest more capital into producing more gasoline.

The incentive for more gasoline supply is what you call “greed” or profits.

Profits are the catalyst for more Good in the world than any charity or “good intentions”.

Government regulation and monetary inflation are the culprits. Your blame is misplaced.

My point is that people should not view profit as a human vice nor a necessary evil nor as a cause for sadness.

Profit is the result of one of humanities’ greatest achievements, the peaceful production of value and wealth.

Profit is the result of taking economic “inputs” including labor, capital and natural resources aggregating a certain value and creating an economic “output” of greater value.

Only humans have this capacity to produce goods and services well in excess of their own consumption; i.e. wealth.

The Texas rancher that suffers the hardships of cold and sweat does not work to raise steer from the goodness of his heart or so New Yorkers can be well fed. The Texas rancher works for his own self-interest and to provide a better life for himself and his family.

The Texas rancher has every reason to charge the most advantagous price he can for the “fruits of his labor.” The result of his work is that New Yorkers can enjoy a hearty prime rib roast.

The sad and unfortunate truth is that most Americans do not recognize the benefits of capitalism but rather equate malicious and unethical business dealings with greed or ambition.

The real target for blame of the rising prices of gas and other commodities is Government…both burdensome regulations and the inflating of the dollar…these are reasons for sadness.

You are right. Profit in and of itself is not sad or evil, and I certainly did not intend to personify it in that way, nor did I mean to denigrate capitalism, a system that lets me live my life in relative freedom and comfort. I should have been more precise; it’s exhorbitant profit seeking at the expense of natural, shared resources that saddens me. Generally speaking, when profit becomes the sole goal of companies and political power becomes the sole concern of government agencies, we all suffer. Both would do better to employ their power and political position, at least in part, for the common good. All the profit in the world won’t help you if you ain’t got a world.

Yes we live in a profit driven world. I don’t argue that point. My problem with the oil companies is this: How can they have record profits when I doubt they are selling more gasoline? It seems to me that when the price of oil rises the price of gasoline rises even more. In other words if the price of oil rises a penny a gallon the price of gas rises two cents a gallon when it should only rise a penny. The only factor that changed between buying the oil and selling the gas is the price of the oil. This is what I call GREEDY. There is no other way to explain these record profits. If the oil companies just passed on the increase in the price of oil they would be making the same profits. Instead their profits continue to rise as does the price of oil.

Typically higher profit margins result in businesses that have propietary products or services. The energy business is not particularly proprietary since the products are mostly a commodity.

Don,

Interestingly, the oil industy’s net profit margin of approx. 8.3% is less than many industries and certainly not excessive.

Maximum profits do not necessarily occur at the highest price. The higher the price, at some point, the less units sold. Even oil has elasticity…that is as the price goes too high, alternate energies become substitutes and demand for oil subsides.

Gas prices have increased less, not more, than the price of a barrel of oil. The producer price for a barrel of oil has increased by approx. 400% in the last 7 years, while the consumer price of gasoline has increased by a much lower 230% over the same period.

Notwithstanding inflation, commodity prices are most affected by changes in supply and demand not by energy companies. For example, in the 1980s a barrel of oil was $10 per barrel. If oil companies had the control that Don and pundits claim, why couldn’t oil companies have simply raised the price of oil from $10 to $100 barrels in 1980?…there were no regulations prohibiting such behavior.

Profits are necessary to signal markets that capital is needed to flow toward the production of the goods and services that markets most demand.

If Government constrains the profits of oil companies, the result will be less oil.

The real problem is Government control over currencies and markets…for just about everything; education, energy, food, real estate, etc.